Video-case: ALLBIRDS

How Allbirds Became a $1.4 Billion Sneaker Start-Up

Video Link: https://www.youtube.com/watch?v=NPBsWxGxtSo&ab_channel=CNBCMakeIt.

Instructions: Watch the YouTube video using the link above, then answer the questions that follow by
filling out this sheet. Each of the boxes below will expand if you require more room.
We will discuss the case in class, so be prepared to interact on each question.

1. Conduct a value chain analysis for Allbirds. What key opportunity for optimization did you find? How
should Allbirds approach this opportunity? Should they invest, divest, develop internal capabilities, or
outsource?

List the key opportunity below

- Demand for knit wool sneakers drove a 30 percent spike in the price of wool in 2017

Explain how Allbirds should approach the opportunity in two or three sentences or bullet points.
- The price’s increasing can make them the leader of the market because they can afford the
raw material
- because of this increase, they can develop a new way to recycle old wool and being more
efficient

2. Based on your analysis, what is one key activity that does not substantially contribute to Allbirds'
competitive advantage? If it’s something that Allbirds handles internally, should they outsource? Justify
your answer using the insight from your VCA.

List the key activity below

- Other companies' prices are sometimes cheaper

Explain how Allbirds should approach this activity in two or three sentences or bullet points.
- Other companies sometimes have a wider range of products and can therefore afford to sell at
lower prices in order to sell in larger quantities

- Selling at a lower price

- Find cheaper production ideas

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3. Which competitors did you choose to benchmark Allbird's capabilities against?
How does Allbirds compare?

Competitor 1 Comparison to Allbirds

Nike: - Different approach to growth: Nike has built hype around its frequent releases
and sneaker drops. While Allbirds is all about reduction of the shoe down to its
simplest form.

- Nike has an even 50% split of online and offline sales, while Allbirds has 23
stores around the world that make up less than a quarter of its revenue.

- Nike has global mobile apps, physical stores, e-commerce, social platforms,
while Allbirds’ consumer touchpoints are comparatively narrow.

Competitor 2 Comparison to Allbirds

Rothy’s: Main difference: shape and fit

- Rothy’s makes 2 different flat styles that come in a bunch of colors and
patterns. Allbirds makes one flat style which comes in 8 colors.

- There is also a Difference in the construction. R uses recycled plastic water

bottles, while Allbirds uses knit fabric made from sustainably harvested
eucalyptus pulp.

- Difference of price: Rothy’s rounded toe flats retail for 125$ and pointed toe
flats for 145$, while Allbirds’ flats cost 95$.

4. In the video, Allbirds' Co-CEO, Joey Zwillinger, notes that "We're a material science company… more
than anything" Do you agree that material science activities are one of Allbirds' key activities in its value
chain? Justify your answer using insight from your value chain analysis.

Outline your answer with a brief paragraph or a detailed bulleted list

Material science activities play an important part in the value chain of Allbirds. While competitors
prioritised cost cutting, the company was able to gain a competitive advantage by focusing on
sustainability. The manner Allbirds is sustainable isn't superficial; the concept is valued at every stage
of production.

- Outsourcing of production: selling the majority of the goods online (saving costs)

- Pay great attention to consumer feedback, when Allbirds increases its product differentiation,
differentiation will meet market demand. Allbirds' activities are flexible, allowing the organization to
respond to market trends.

- No substitute products for the shoes

- The threat of new entrant insignificant as the cost of production and development are generally
prohibitive.

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 - Suppliers and consumers hold moderate bargaining power

- By limiting the range of products the company has saved expense on R&D.

5. With players like Nike and Adidas, the shoe market is extremely competitive. How could the insight
generated from a VCA help Allbirds compete successfully against these well-financed giants?

Outline your answer with a brief paragraph or a detailed bulleted list

Different from Nike and Adidas, Allbirds has a completely different strategy, which is the reduction in
the production of the shoes to the simplest form, which is the main difference with the other two firms,
that instead continuously change their products and produce thousands of different models every year,
with many different collaborations. Instead, Allbirds has only three models, with less than ten possible
colors. Another advantage of Allbirds is that many famous engineers and sport athletes like Tim Brown,
have stated that these shoes are the most comfortable shoes in the entire world due to their simplicity,
different from Nike and Adidas shoes which are much more complex, moreover many famous
politicians and celebrities, like Barack Obama have been seen wearing Allbirds shoes without any
collaboration or advertisement, and this might be a huge advantage for the company. Another thing
might be that Leonardo Di Caprio, which is famous worldwide both for being an actor and for his works
for climate change and pollution has become an investor of Allbirds, and this might increase their
networks of costumers, thanks to Di Caprio’s visibility.